Large baskets of live tilapia were transported from Wenchang and Qionghai and went through such procedures as cutting, peeling, polishing, bone-removing, trimming, grading and cleaning on the production lines so as to get ready for the market.
 
All these processed tilapias used to be sold to the overseas markets, but these past two years have witnessed the change that some of the tilapias are provided to the domestic consumers.
 
Like Xiangtai Fishery, both Hainan Qinfu Industrial and Hainan Sky-blue Ocean Foods have shifted their attention from the overseas market and started the domestic market development.
 
Before these tilapia companies took action, shrimp and golden pomfret companies had also changed their attention from the overseas market and established their own customer groups in the domestic market during the recent years.
 
And these tilapia companies in Hainan can learn a lot from the shrimp and golden pomfret companies as to the branding, logistics and so on.
 
The tilapia companies in Hainan used to rely on the overseas market, but they have come to realize that they need to change their marketing positioning in order to survive because of the continuous decrease in the export prices since 2010.
 
Is it necessary to develop the domestic market? The answer is yes because of the increasing export restraints.
 
The tilapia companies in Hainan used to rely on the overseas market, but they have come to realize that they need to change their marketing positioning in order to survive because of the continuous decrease in the export prices since 2010.
 
Recently the market situation has been fantastic for both Hainan’s farmers and processing plants, making great profits from tilapia, whose export price stays high and farm gate price is also high, at CNY 10/kilogram.
 
However, Zhou Qinfu, the chairman of Hainan Qinfu, is certain that it is of great necessity for the Hainan tilapia companies to develop the domestic market in spite of the positive export situation. Zhou has been in the tilapia aquaculture and processing industry of Hainan for over 20 years, so he is nicknamed “The Tilapia King of Hainan”.
 
His prediction for Hainan tilapia is based on the difficulties he has gone through in the tilapia farming during the past few years.
 
Zhou said, “the high tilapia price is the result of the small amount of tilapias available in the market this year”. Last year, many farmers have given up tilapia farming in Guangdong and Guangxi because of the decrease in tilapia price, said Zhou.
 
Zhou continued that the tilapia industry in Hainan used to be dependent on the overseas market.
 
The export price stays stable in such market as America, but the overall market has been unstable during the past few years.
 
The export price was as high as CNY 10.2/kg during 2010, but then the farmers suffered great loss because the price kept decreasing and arrived at CNY 7.6/kg in the first half of 2013.
 
“It is not that there is no demand of tilapias in the foreign markets, but there is excessive supply because the domestic companies are unduly dependent on the overseas market”, said Zhou. And the unstable tilapia export price results from the fierce competition among the domestic companies.
 
“We can only change the passive position in export through the development of domestic market”, said Liu Rongjie, the chairman of Xiangtai Fishery. The passivity of tilapia exporters shows in such aspects as the fierce price battle, unpredictable trade barriers and the low export profits.
 
The tilapia export cost increases because the Chinese tilapia companies need to adapt their products to the requirements of importing countries where the NGOs keep updating their certificate regulations. Also the export profit also decreases owing to the changes in exchange rates.
 
Penaeid shrimp in Hainan used to be exported, but most of them have been forced to target the domestic market because of the antidumping policy in America a few years ago, according to Wang Ping, the general secretary in the relative shrimp farming association of Hainan. And the sales of these shrimp are quite promising in the domestic market at present.
 
It has become a general consensus among the domestic tilapia processing companies that they should change over from being totally dependent upon export to developing the domestic market while retaining the foreign customers.
 
“It is high time that the Chinese tilapia industry makes the changes for survival”, said one officer from China Aquatic Products Processing and Marketing Alliance (CAPPMA).
 
Although there are great difficulties in the export of Hainan tilapias, the insiders are still optimistic about the export market. “The export market of tilapias is still promising”, said Zhou. And there are two reasons for the optimism.
 
On the one hand, tilapias, “the fish of 21st century”, enjoy a mature market in the foreign countries and western consumers have begun enjoying tilapias many years ago, especially the consumers in America where tilapias ranks third among all the aquatic products.
 
On the other hand, Hainan has the obvious advantages over other provinces in China as to their tilapias’ output and quality.
 
What about the domestic market development?
 
Although there is great market potential in China, branding is necessary for the market development.
 
More and more Chinese start to appreciate tilapia and there is an increasing number of western and Japanese restaurants in such cities as Beijing, Shanghai and Dalian, which add tilapia fillets to their menu and are pleased with the increasing trend of the sales.
 
The companies are taking measures to cultivate the Chinese consumers’ passion about tilapia.
 
Many companies have started to set their development plan in the domestic market since last year and these companies include Sky-blue Ocean Food, Hainan Qinfu, Xiangtai Fishery, Lihe Food, etc.
 
Among them, Hainan Qinfu has established retail outlets in such cities as Shanghai, Tianjin, Shenzhen and Wuhan, and its sales in the domestic market is about 10% of that in the foreign markets, while Xiangtai Fishery has set its subsidiary in Beijing and sell its products to the areas like Shanghai, Guangzhou, northeast China as well as northwest China.
 
But the overall sales value of Hainan tilapias is small in the domestic market compared with that of foreign markets.
 
It is hardly possible to increase the domestic demand of tilapias in a short time owing to the long-term consumption habits and product image of tilapia, said Lin Xiaowen, the general manager of Sky-blue Ocean Foods.
 
Lin added,” it will take some time for tilapias to be widely accepted in the Chinese market”. Its marketing process will be time-consuming, because a lot of consumers are not used to eating any tilapias nor many processed aquatic products.
 
However, these companies were pleased to find that the domestic sales of tilapia fillets had been on the rise last year because of the obvious changes to people’s consumption habits.
 
And the collected data show that a variety of western and Japanese restaurants have started selling flaked tilapias in Beijing, Shanghai and Dalian where there has been little tilapia consumption before.
 
Penaeid shrimps and golden pomfrets have set a good example in the development of domestic market.
 
According to the processed companies in Hainan, there is great potential for tilapia in the domestic market because of the following two factors.
 
On the one hand, the tilapia there are delicious, nutritious and cost-effective with few bones among the muscle. On the other hand, there is greater demand for fish products with changes happening to the consumption habits of the new generations because of the improvement in living standards.
 
The domestic development of penaeid shrimp and golden pomfret has strengthened the faith of tilapia companies in the domestic market.
 
Take the domestic development of golden pomfrets for example. In 2010, Lingao Haifeng in Hainan has started promoting its golden pomfrets in the domestic market because of the sluggish export market.
 
But the company was faced with the bad market situation that year because of its insufficient promotion.
 
Luckily, with the increase of such promotional activities as exhibition, the golden pomfrets have become widely received in China now. “At present, the Hainan golden pomfrets mostly target the domestic market with great demand,” said Huang Daling, the general manager of Lingao Haifeng.
 
As to penaeid shrimps, “its export volume was 60% of the total output a decade ago, but the export proportion has decreased to a very low number, while the output has multiplied during the past ten years”, said Cui He, the general secretary of CAPPMA. Cui continued, “the tilapia industry will be in a situation similar to the current one of shrimp industry”.
 
All the Hainan companies can deliver tilapias by the sea transportation, while they need to win the market by brand positioning.
 
The domestic market has attracted more and more tilapia processing companies in different areas of China, so Hainan tilapia companies need to figure out how to win in the fierce competition.
 
The tilapias from Hainan have both its advantages and disadvantages in the competition.
 
As to the advantages, it has been cultivated and processed strictly adhering to the standards and export regulations so they are of high quality without any muddy taste, drug residue nor additive. The disadvantages are that the relative high cost of cultivation and that of logistics owing to the sea transportation.
 
“The priority is the promotion and brand positioning in the domestic market development of tilapias”, said Zhou. He has optimistic about the development of Hainan tilapia in China, because the tilapias’ high quality can meet the demands of domestic consumers who attach increasing importance to the problem of food safety.
 
The promotion of Hainan tilapias can not be totally dependent upon the local companies, who have already made great investment in this field for the past two years but seem to lack the funds to continue the promotion, according to Tan Xueyou from Hainan Aquatic Products Processing and Marketing Association (HAPPMA).
 
“The government should take an active role in the promoting tilapias of our province”, added Tan. He continued that the government can take such measures as making advertisements for Hainan tilapias, assisting the companies in carrying out different promotional activities and launching special funds for the branding of Hainan aquatic products.
 
What is the significance of the tilapia industry for Hainan?
 
As to the economic contribution, tilapia are the main export products of Hainan, as the following statistics show.
 
Hainan’s tilapia and other relevant products ranks second as to the export volume compared with that of other areas in China.
 
The export value of aquatic products is US $530 million, around 90% of the agriculture products’ total export value, with tilapias as the main aquatic products.
 
In terms of employment, there are over 100,000 people who are in the industry of tilapia farming, processing or transporting.
 
The Hainan tilapia industry can achieve rapid and steady development if it takes action to develop the domestic market successfully and balance its growth in both markets.
 
The conclusion is reached based on the following two factors.
 
First, this action can make contribution to the healthy development of Hainan foreign trade through reducing the industry’s dependence on the foreign markets and ridding it of price battle as well as concern about trade barriers. Second, this action can drive the updates and advancement of Hainan tilapia industry.
 
The difficulties in the development of domestic market lie in the high logistic cost. The exported chilled tilapia are not popular among the Chinese consumers, while there are difficulties in the transportation of live ones, which include the high logistic cost and the backward fresh-keeping technology.
 
As to the problem of different consumer preference, the tilapia companies come up with the solution of inventing new products and further deepening the tilapia processing.
 
Hundreds of “armed” staff were buried in the cutting, pealing and bone-removing of live tilapias inside the processing plant of Xiangtai Fishery, after they had disinfected their bodies and worn the working garments, caps as well as gloves.
 
“The quality of our flaked tilapia is reliable, because it is processed adhering to the strict regulations as to the food safety in the foreign markets”, said Liu, filled with great confidence.
 
The main export products are the frozen tilapia, which are either filleted or left intact for the Hainan companies. Can these two products be accepted in the domestic market?
 
Liu has found that the demand is quite small for frozen whole tilapia, while the sales of fillets is satisfactory in the north China during his domestic market development last year.
 
“The wholesalers think that the price of frozen, whole tilapias is unacceptably high,” said Liu. The plants sell the chilled whole ones at the price of CNY 15 /kg and consumers will prefer such marine fish as hairtail and golden pomfrets whose prices are close to that of tilapias in the market.
 
The consumers in the south China like live aquatic products much more than frozen, while the frozen fish are more accepted in the north China. Hainan used to export frozen shrimp, but now it achieves great success in the sales of its live shrimps in the domestic market.
 
There still exist many difficulties in the domestic market development of Hainan live tilapia.
 
The two major difficulties are the logistic cost and the fresh-keeping technology. Because the cost is quite high to transport the live aquatic products, it is more reasonable for the Hainan companies to sell the live aquatic products with high market price.
 
Even if the companies settle the problem of logistic cost, they still have to deal with the problem of fresh-keeping technology which can not support the long-distance transportation.
 
But Zhou predict consumers will change their consumption habits gradually and be more open to the processed chilled tilapias, because “the chilled ones are cleaner and safer”.
 
The live aquatic products undergo few test about their drug residue and are the easy targets of various bacteria. But the Hainan chilled aquatic products can retain their freshness as well as nutrition, and they assure the consumers of their safety with no drug residue.
 
With the accelerating space of daily life, consumers show increasing demand for ready-to-cook and ready-to-eat fish. Baiyang Group in Guangxi markets a fish feast which includes twelve tilapia dishes cooked in different ways and the feast is increasingly popular in the market.
 
Although consumers in Hainan like live aquatic products, the past few years have witnessed the increase in the sales of fish balls and chilled flaked tilapias in the Carrefour supermarket Haikou, according to Chen Yu in charge of the supermarket.
 
“The demand is greater for such commodities as fish ball during winter when consumers enjoy them as the ingredients of hot pot.”
 
SOURCE: seafoodnews.com
 
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